Indian rebar export offers fall by $20/t, further drop likely

Indian rebar export offers continued its downward trend this week too with mills lowering offers to $780/tonne (t) CFR Hong Kong on actual weight (AW) basis, market sources informed SteelMint. However, no significant deals were reported off late even at lower offers.

SteelMint's last assessment on 13 May for BF-route rebar (B500B) stood at $790-800/t CFR Hong Kong on an AW basis. Considering this, Indian rebar export offers fell by around $20/t, w-o-w and sharply by $125/t m-o-m.

Factors behind the drop in export offers-

• Competitive offers from the Middle East: Middle East-based mills have reportedly lowered their rebar export offers further to around $750/t CFR Hong Kong on AW basis for July shipment, lower compared to Indian rebar offers.
  
  
• Bid-offer disparities: Trade sources expect that Indian rebar export offers may come down further. Bids are heard at the level of $730/t CFR.
  
  
• Turkey rebar export offers continue downtrend: Turkey-based mills continue to decrease their rebar export offers by around $45/t w-o-w amid a continuous fall in the country's imported scrap and long steel prices and almost no trading activity seen due to the absence of buyers and steelmakers from both domestic and export markets.
  
  
• Fall in Indian domestic offers: Sluggish demand in the domestic market contributed to the fall in prices. Steel Authority of India Ltd (SAIL) has recently adjusted its rebar (12-32mm, IS1786) list prices with effect from 10 May. Post-revision, the effective price stands at INR 68,000-68,500/t ($877-884/t) ex-Mumbai and INR 65,000-65,500/t ($838-845/t) on ex-plant basis, excluding GST at 18%. Meanwhile, JSPL has also corrected rebar (12-32mm, IS1786) prices with effect from 10 May. The effective price stands at INR 65,500-66,000/t ($845-852/t) on ex-plant basis, and INR 69,500-70,000/t ($897-903/t) delivered Delhi-basis, excluding GST at 18%.
  
  
• Volatility in SHFE rebar futures: Volatile China's SHFE rebar futures pulled down rebar export offers. According to data maintained with SteelMint, the SHFE rebar futures contract for October 2022 delivery closed at RMB 4,638/t ($695/t) on 20 May, witnessing a fall of RMB 32/t ($5/t) w-o-w.
  
  

Outlook

Indian rebar export offers are likely to remain under pressure in the near term amid competitive offers from the Middle East and falling domestic prices. The approaching monsoon season in July may slow down construction steel demand in the country which will most probably force Indian mills to allocate their materials in the export market to liquidate their piled-up inventories.